The Deputy First Minister yesterday compared the Northern Ireland economy to a cork bobbing about in a raging ocean. He conjured this analogy as part of his announcement of £580m of public expenditure on public infrastructure – roads and hospitals. He indicated that rather than just “lie down” the Executive was committed to spend money to save the economy.
It’s fortunate that the UK exchequer is there to provide the funding, of course. The UK is one of a dwindling number of Western economies still able to easily borrow and still clinging to a AAA credit rating.
Northern Ireland is indeed a miniscule player in the global economy. Were it to go it alone in the economic ocean it would not have the luxury of a top-drawer credit rating, or the unbounded borrowing potential of the UK treasury. Hence, despite having an even worse economy than the Republic of Ireland, with a greater public account deficit, and poorer levels of economic output, the Executive is still able to announce this largesse – “to help the construction industry”. Quite why the construction industry has been singled out for such state subvention is a bit of a mystery.
The £580m stimulus package announcement comes just a few weeks after similar big ticket public infrastructure announcements in Britain. George Osborne is resorting to good old Keynesian spending to help stimulate the economy. However, it’s very unlikely that Keynes ever expected UK government borrowing to be £1.046 Trillion by fiscal year 2012. Quantitative easing has never looked like this before.
Much of yesterday’s £580m announcement will be spent on professional fees, and a great deal will leak from the Northern Ireland economy. Vast amounts will be sucked up by civil service administrative bloat.
It was interesting, also, that the announcement came just a day after announcements in the Republic of Ireland that a major shake-up in the education sector is planned. These plans will rip out administration and overheads in Irish tertiary education. Meanwhile, in Northern Ireland, there appears to be no resolve by the Executive to reduce the vast waste of public money by our over-abundant central government departments and local councils – required to run a place with a population 700,000 less than Greater Manchester.